Oklahoma plans to cut insurance costs; some have concerns
Some Oklahomans have questions whether the state's plan to reduce insurance costs could end up burdening the public.
The state is seeking permission from the Centers for Medicare and Medicaid Services to set up a “reinsurance” fund that would act as a backstop for the individual market. Essentially, the fund would pay a certain percentage of insurers' bills for expensive patients.
Health officials held a public comment meeting about the proposed waiver Monday afternoon at the Capitol. The state still has to finalize the application and submit it to the federal Centers for Medicare and Medicaid Services.
The reinsurance program would cover 90 percent of the costs insurance companies bear once a customer filed more than $15,000 in claims, said Buffy Heater, the waiver strategy officer at Oklahoma Health and Human Services. Insurers would hit a cap when a customer's medical bills hit $400,000 and wouldn't get any more payments, she said. Insurers could save up to $346,500 for each patient who needs $400,000 or more in care.
“Oklahoma would have a robust reinsurance program,” she said. “We would hope that by having such a robust reinsurance program, we could draw more insurers into the market.”
Dick Beale, a semi-retired insurance agent from Oklahoma City, said he doubts a reinsurance program would persuade insurance companies to enter the Oklahoma market. Ultimately, it doesn't reduce the cost of health care, he said.
“I don't see this happening,” he said. “It's a Blue Cross reinsurance program.”
The fund would lower insurers' risk, allowing them to charge lower premiums and hopefully attracting healthier people to the market. The state hopes rates would fall by about 30 percent, to $431.25 per month, or about $5,175 per year, Heater said.
“The goal is to get Oklahoma's market back to the rates that were seen in the 2016 plan year,” she said.
As many as 21,000 people could decide to jump into the market, Heater said. They also hope fewer people would stop paying their premiums mid-year, she said.
“We expect that would occur largely in the group with higher incomes,” she said. “We would hope that there would be healthier lives that are attracted to the market.”
The state would pay for the reinsurance with repurposed federal funds, which currently are used for tax credits to subsidize insurance premiums, and with an assessment on group insurance plans of up to $4.95 per person per month. If the insurance companies passed the cost on to customers, a family of four would pay up to an additional $237.60 per year.
“That is certainly an up-to amount,” Heater said.
Mike Dollins, an insurance broker in Oklahoma City, said he was concerned that the reinsurance program represented an “open checkbook.” He also raised concerns that costs on plans for small businesses could go even higher if other types of plans received a smaller fee.
“I would say that Blue Cross, the current carrier, and any other carrier, would have very little risk, and it would be borne by the people paying the fee,” he said.
Dollins said he also worried the state would be stuck paying more for reinsurance if the federal contribution came in lower than anticipated.
“You assume some very positive things, and you said you had data to back up that, but I saw none in your waiver,” he said.
People who couldn’t attend the public meeting about the state’s plan to reduce insurance costs can submit comments at https://www.ok.gov/health/Organization/Center_for_Health_Innovation_and_Effectiveness/1332_State_Innovation_Waiver_/index.html.